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In this Blog we explain how the newly enacted Finance Act 2024 impacts on the Director Disqualification Regime and extends disqualification powers to HMRC


The Finance Act 2024 (‘the Act’) received Royal Assent on 22 February 2024, marking an important update in the UK’s financial legislation. While it enacts broad revisions to tax regulations, financial reporting, and compliance mechanisms, this article focuses on the relevant elements concerning tax avoidance schemes and director disqualification — specifically, Schedule 13 of the Finance Act 2024.

  • Schedule 13 of the Finance Act 2024 concerns circumstances where a winding-up petition is presented by HMRC on a just and equitable basis in the public interest.  In these circumstances, HMRC can later seek an order that the director of a company subject to such a winding-up order be disqualified.
  • This serves to replace the role of the Secretary of State for Business and Trade and the Official Receiver, acting through the Insolvency Service, for such winding-up orders.

Director disqualification plays a crucial role in safeguarding corporate integrity and protecting both the public and financial systems from misconduct. Schedule 13 introduces amendments to the Company Directors Disqualification Act 1986 (‘CDDA’), aiming to empower HM Revenue & Customs (‘HMRC’) to initiate disqualification claims against directors involved in promoting tax avoidance. This also encompasses individuals exerting control or influence over a company, such as shadow directors, who, despite not being listed on company registers, might effectively be known to manage a business.

Prior to the Act, only the Insolvency Service, on behalf of the Secretary of State for Business and Trade, could pursue such disqualification claims. Therefore, the Act represents a bifurcation that separates HMRC’s interests in disqualification with those of the Insolvency Service.

The Act provides HMRC with specific powers to:

  • Pursue disqualification based on findings of unfitness if the individual is or was a director of a company promoting tax avoidance.

Amendments to the CDDA 1986

The Finance Act at schedule 13 integrates two new sections into the existing Company Director Disqualification Act 1986 — sections 8ZF and 8ZG. These sections set out circumstances where  a disqualification order may be made against an individual upon the application of HMRC:

  • Section 8ZF of the CDDA provides the Court with the power to make a disqualification order if an individual was a director or manager of a company wound up by HMRC on a just and equitable basis in the public interest, which is a very wide definition. This appears to extend the previous powers of the Secretary of State to seek a winding-up order against a company in the public interest.  This change appears to extend that to HMRC, without the necessary section 447 reports that were historically sought from the Insolvency Service’s public interest unit.
  • Section 8ZG provides the Court with the power to make a disqualification order if an individual is or has been a director, shadow director, or manager of a business acting as a promoter of a tax avoidance scheme (as defined under the Finance Act 2014), and their conduct deems them unfit for company management.

Additional provisions in Schedule 13 amend the CDDA to include references to HMRC, but essentially maintain the essence of existing legislation:

  • The period for disqualification may range between 2 to 15 years.
  • HMRC must initiate any disqualification claim within 3 years from the making of a winding-up order over the company, which reflects the same limitation applicable to disqualification claims by the Official Receiver or Secretary of State for Business and Trade.


Whilst the impact of the changes are yet to be seen in practice, our key observations are set out below

  • Disqualification undertakings can still be offered and director disqualification section 16 letters will still be required to be sent by HMRC, providing notice of the intention to issue a disqualification claim. 
  • We note that the terminology used in the legislation does not reflect the more prescriptive procedural rules imposed on all disqualification claims issued under the CDDA (as amended) and so it will be interesting to see if HMRC begin to issue such applications properly, especially as they are rarely involved in non-tax tribunal civil proceedings, other than for enforcement purposes (winding-up and bankruptcy orders).
  • The introduction of these powers signifies a strategic shift in government policy as regards director disqualification, moving away from a focus on COVID-19 related recoveries to a more stringent approach against tax avoidance. The termination of the Bounce Back Loan Scheme (‘BBLS’) on 31 March 2021, means that eventually the Insolvency Service’s emphasis will shift  from COVID-19 towards other forms of financial misconduct.
  • That said, most tax avoidance schemes were entered into some time ago and so are becoming subject to resolution through the First Tier Tribunals or by settlement.  The incorporation of HMRC having powers to seek a winding-up and disqualification on a “just and equitable” basis (a term more closely associated to solvent liquidations) gives wider powers in anticipation or other types of ‘non-tax paying’ behaviour arising in the future.
  • With HMRC now equipped to directly seek disqualifications, a surge in tax-related disqualification investigations is anticipated. This development may not only reflect a change in priority but also introduces harsher repercussions for those exploiting tax avoidance schemes.
  • The Finance Act 2024 marks a significant evolution in the UK’s efforts to deter tax avoidance and other anti-tax behaviour and maintain economic integrity. By extending disqualification powers to HMRC, the Finance Act 2024 aims to fortify the legal framework against what the Government perceives as financial misconduct, and signals a robust stance against corporate misconduct specifically. As this legal landscape evolves, directors and companies must navigate these changes to avoid the severe consequences of non-compliance and seek advice accordingly.

If you have any concerns about you, your business (or your client’s business) arising from the matters above, then please let us know.  We have a dedicated teams able to assist with the following specialisms

  1. Tax disputes
  2. Director disqualification
  3. Company Rescue
  4. Claims against directors
  5. Commercial Litigation
  6. Dispute Resolution

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